Tech catches holiday shoppers in their tracks

Santa may see you when you’re sleeping and know when you’re awake. But retailers are giving the North Pole a run for its money when it comes to tracking their customers’ behavior.

Hundreds of stores now have software that tracks smartphones and knows when you entered a store, where you went, whether you bought something or if you stopped at another shop across town. It’s the next frontier for online tracking that lets companies analyze browsing habits and send you an ad for the Hawaii vacation you just researched.

Text Size

-

+

reset

And it’s just the latest in a string of burgeoning technologies that extend data crunching to where you went or what you look like — leaving Washington’s traditional privacy debate with a whole new set of questions.

“It’s one thing to have someone put cookies on your computer when you’re on your laptop or desktop and do that,” said Sen. Al Franken (D-Minn.), who chairs the Senate Judiciary subcommittee on privacy and technology. “But your location information, with your smartphone, that’s a different thing entirely to me.”

Most tracking technology works like this: A shopper walks into a store, cellphone in hand, purse or pocket. The phone, likely with Wi-Fi or Bluetooth turned on, sends out a signal when looking for a connection. That signal includes a sort of ID number, called a MAC address. Retailers have software that can determine the phone’s location based on how strong the signal is when it bounces off a few receivers in the store.

Right now, most data is used to measure impersonal trends like how customers flow through a store or how long wait times are at the checkout line. But other technologies, like Apple’s iBeacon, are more personal and let stores ping individual consumers with a coupon or store map when they walk in the door.

Nearly every sector of the economy is trying to leverage more data to better serve customers and target consumers, and retailers are no exception. Stores have long used lower-tech options to get a sense of how customers move around a store or when more checkout lines need to be opened — but it’s the higher tech solutions that have caught the eye of a few lawmakers and regulators at the FTC.

Tracking a customer’s location — even in the name of eventually providing a better service for shoppers — is the kind of thing that raises privacy red flags, especially as broader location-tracking concerns ripple through Capitol Hill. One estimate says as many as 1,000 retailers, including national chains, are using high-tech analytics systems.

Franken, who sent a letter to major analytics firm Euclid in March with concerns about how the company shares and protects the data it collects, introduced a broader location privacy bill last Congress that requires consent before companies can collect location data. He plans to reintroduce it next year, he said, and hasn’t ruled out adding in new language to specifically address retail tracking.

But complex consumer privacy legislation is generally considered a nonstarter in this political climate, as businesses remain wary of rules that could stifle innovation. Enter the device-tracking industry, which helped create a self-regulatory code of conduct this summer. Basically, stores and tracking companies police themselves. The guidelines, unveiled in October but still being developed for implementation in the real world, were crafted with the support of Sen. Chuck Schumer (D-N.Y.).

The voluntary code, chiefly drafted by a Silicon Valley-supported privacy group called the Future of Privacy Forum, governs questions like what kind of data stores can collect, when it needs to be anonymous and how to tell users what retailers do with it. It says stores must put up signs to tell customers about data collection, and users can stop being tracked by going to an opt-out website. And it says that companies can’t retain data linked to a specific person or device, unless the customer gives his or her consent.